So 2011 is coming to a close and for most is best forgotten. A strange year as it started with the expectation that the UK economy would continue to move forward albeit at a low rate of growth. But as the year comes to a close, the hope is that we will avoid another recession in 2012. The likelihood of any increases in UK interest rates also seems remote as the banks need to restore their balance sheets before allowing funds to be lent to fund economic growth.

This week sterling has lost ground across the board. Post Christmas retail sales went better than expected but there is no doubt margins were significantly reduced as the retailers made a dash for cash. The fear is that further quantitative easing will be required in early 2012 to help boost the UK economy.

Two Italian debt issuances were completed this week. Both were successful although the interest rate was close to 7% for the longer dated bonds. This is the interest rate which is viewed as the tipping point between the debt being affordable or it being unsustainable. These successful debt issuance helped the euro pull back from its 11 month low against sterling. The US$ had a good week benefitting from its safe haven status and an economy that is moving forward at a quicker rate than in Europe.

From all of us here at Smart we wish you all the very best for 2012 and hope that you have the best of health and a highly prosperous year as well.

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Still in the Christmas period when trading volumes are low and the issuance of UK economic data somewhat sparse. Sterling lost a bit of ground as activity focussed on the safe haven status of the US$.

A bit more excitement in the euro zone. The Italian government successfully issued some six month bonds at a much lower interest rate than expected. This was viewed positively. Today we have the Italian government issuing a tranche of longer dated bonds and it will be very interesting to see if they end up paying a lower than expected interest rate.

The US$ gained ground against sterling on the back of a large sale of sterling. This accentuated the US$’s safe haven status. US economic activity continues to be positive which bodes well for the US$ as we enter 2012.

Please remember we are still “open for business” as we come to the end of a very busy 2011.

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A quiet day on the currency markets yesterday as we enjoyed an extended Christmas break. The City of London is the largest currency market in the world and as such trading elsewhere was fairly muted. There was little movement between the major currencies.

At the end of last week, worries about the UK economy came to the fore and the increased probability of further quantitative easing. It is unlikely the post Christmas retail sales have helped much as it seemed that significant price cuts were needed to convince shoppers to part with their cash.

This week we have the Italian government making a debt issuance. The markets will be watching very closely to see how successful it all is. A poor take up of the debt issuance will be negative for the euro.

We are open for business this week so if you need some help with your currency needs please get in touch. We will be delighted to help.

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Markets are quiet in the build-up to Christmas. Sterling had a steady day against most currencies. Slight revisions to previous growth figures were released but it is future growth that most people are worried about and the uncertainty in the euro zone has a very significant knock-on effect on us. A fall back into recession is thought to be highly likely.

The main event for the euro happened on Wednesday with the ECB’s three year funding for the banking system coming to a close. Near enough €500 billion was lent to the banks, representing an important step in maintaining liquidity as banks pulled in their “lending” to other banks.

The US continues to move in a narrow range against sterling. The US economy is clearly ahead of the curve when compared to Europe but I am sure there will be some economic headwinds that make it across the Atlantic.

We circulated our opening hours yesterday for the holiday season but it is very much business as usual. If for whatever reason you do have difficulty getting through by phone, please use the email info@smartcurrencyexchange.com if you are a private client and info@smartcurrencybusiness.com if you are a company. We will get back to you straight away.

All that is left to say is have a wonderful Christmas.



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Sterling hit the highest level against the euro since January 2011, breaking through €1.20/£1 and hitting a high of €1.2043/£1 as strong demand for lending from the ECB failed to alleviate concerns over the European debt crisis. Despite sterling’s strength against the euro, the Bank of England minutes were pretty downbeat with policymakers mulling over further Quantitative Easing in February but this had little impact on the pound. Call in now for a live exchange rate as last year when it hit €1.20 it dropped off for the rest of the year.

In the euro zone, in the first ever offer of cheap 3 year loans by the ECB, banks snapped up €490bn of the funds on offer suggesting that the banking system in the region is heading for an impending funding squeeze. One trader compared the lending as papering over the cracks of a crumbling house. Sterling is expected to move towards €1.25 in the coming months and with total funding requirements in 2012 for sovereign debt sitting at over €1 trillion, this is unsurprising. Call in now for a live exchange rate.

In the USA, it was a relatively quiet day for data in the USA, with the major action taking place in Europe with the ECB funds issue. Initially there was a boost to risk appetite from the uptake which saw the US dollar weaken off. However, as markets began to realise the implication of such an oversubscribed take up, risk appetite reversed and the US dollar strengthened. Call in now for a live exchange rate.

Elsewhere, the Canadian dollar stayed pretty flat despite retail sales figures coming in higher than expected. As data starts to thin out ahead of Christmas, ensure you don’t get caught out by any volatility.

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Sterling jumped to an 11 month high against the euro yesterday as investors scrambled to buy the pound, believing sterling to be a much safer investment than the ailing euro. Better risk appetite also saw sterling gain against the US dollar as strong US and German economic data reduced demand for the safe haven US currency. Sterling’s relative strength is also being put down to an expectation that the UK will continue to hold onto its prized AAA credit rating whereas many see France and Germany at risk of downgrades. Out later today we have the minutes from the Bank of England’s recent meeting which could pour cold water on yesterday’s rally so call in now for a live exchange rate.

In the euro zone, a sharp drop in Spain’s short term borrowing costs saw the euro strengthen against the US dollar yesterday but the single currency still struggled against sterling. Better than expected German business confidence data also helped, but the picture is still a very gloomy one for the region heading into 2012 with many concerned that European policymakers are not doing enough to solve the European debt crisis. The failure of the recent EU summit to reach a solution and the apparent confusion between leaders, the ECB and the IMF as to the best route forward has been worrying markets.

In the USA, the US housing market showed some signs of recovery yesterday as new housing builds reached the highest level in over a year, increasing by 9.3%. Builders have struggled to compete with a wide number of cheap foreclosure properties, so this data helped to give risk appetite a boost across markets as investors saw a semblance of recovery in the US economy. Call in now for a live exchange rate.

Elsewhere, the Canadian dollar strengthened as inflation held steady at 2.9%. Most analysts feel that the Bank of Canada will look to start tightening monetary policy in the coming months. The Australian dollar also strengthened against the US dollar on better risk appetite and as the central bank minutes were less downbeat than expected.


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Sterling continued to hover around a 10 month high against the euro on Monday as concerns over the euro zone crisis saw investors prefer sterling to the ailing single currency. Sterling closed the day near earlier highs of €1.1930/£1 but still remains vulnerable to poor economic data as the UK recovery stagnates. Potential political instability in North Korea saw sterling drop against the US dollar yesterday morning but strong demand from one bank in London saw sterling recover against the US currency. With thinning trade volumes in the run up to Christmas, there is the potential for some volatile moves so call in now if you have upcoming payments to make to avoid losing out.

In the euro zone, the threat of further downgrades kept the euro under pressure yesterday. The ‘risk off’ trading conditions in the wake of the news over Kim Jong-il’s death combined with this to see the euro drop against its major counterparts. The euro is down by over 2% against sterling in the past month as investors prefer the liquidity that sterling offers in the face of a cloudy future for the single currency heading into 2012. Belgium’s credit rating downgrade on Friday has left many feeling that other major countries in the region are set to suffer a similar fate in the coming months. Call in now for a live exchange rate.

In the USA, the US dollar strengthened overnight on safe haven demand as the news emerged of North Korean leader Kim Jong-il’s death. Political uncertainty over the future of the region saw investors buying US dollars to avoid riskier investments – especially given the country’s history of provocation with South Korea in times of domestic crisis. With the White House issuing a statement that it was monitoring the situation closely, the US dollar ended Monday up marginally against sterling after some bank demand saw sterling recover from earlier lows. Call in now for a live price.

Elsewhere, Chinese new home sales figures were lower than expected which is a concern for many. If the Chinese real estate market continues to suffer, many feel that this will impact on the country’s ability to drive the global recovery in 2012. Call in now to protect yourself from losing out to adverse market movements.


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Sterling is holding on to gains against the euro as the euro zone debt crisis cast a shadow over the single currency. Last week saw sterling break above €1.19/£1 for the first time in 9 months as credit rating agency Standard & Poor’s put 15 of the 17 euro members on notice of a credit rating downgrade. The outlook for the UK economy remains fragile despite upward revisions to retail sales figures. In the run up to Christmas, it is a relatively quiet week for data but we still have the Bank of England’s meeting minutes and also final GDP figures for Quarter 3. Call in now for a live exchange rate.

In the euro zone, last week saw Belgium’s credit rating downgraded and France’s rating outlook downgraded to negative. Ongoing concerns over sovereign rating downgrades will keep the euro under pressure heading into the festive period. The main activity today that markets will be looking closely at is a conference call this afternoon between European finance ministers to discuss ways to boost IMF resources. Call in now for a live exchange rate.

In the USA, the US dollar strengthened overnight on safe haven demand as the news emerged of North Korean leader Kim Jong-il’s death. Political uncertainty saw investors buying US dollars to avoid riskier investments. Over the weekend, the Senate approved a $1trn bill to fund government spending and extended the payroll tax cut, but this has since been rejected by the Republicans. Risk sentiment is likely to remain subdued – call in now to ensure you don’t lose out.

Elsewhere, the Australian dollar slipped overnight as risk appetite fell due to the euro crisis and uncertainty over the situation in North Korea. Overnight into tomorrow the Reserve Bank of Australia releases its meeting minutes and the RBA is expected to maintain a downbeat tone. Get in touch now to ensure that you take advantage of better exchange rates.

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Sterling has had a strong week against the euro, strengthening to a 10 month high against the single currency and holding ground as European policymakers struggled to come to grips with the euro zone crisis. The pound did however drop against the US dollar as investors looked to the relative safety of the US currency in the face of increasing doubt that a comprehensive solution will be reached on the debt crisis. Whilst sterling has been holding at €1.19/£1, €1.20/£1 is a key level of resistance that will require a large swing in sentiment to reach, but many analysts now expect sterling to push towards that in the coming months. Retail sales were better than expected on Thursday so call in now for a live exchange rate.

In the euro zone, the euro has had a poor week, dropping to an 11 month low against the US dollar and a 10 month low against sterling. Last week’s EU summit seemed to follow the normal pattern – a framework agreed on a solution, but discussions over the detail pushed back to a later date. Investors are becoming increasingly concerned that this lack of action means that policymakers are far from reaching a solution. Concern is mounting that we will begin to see the first stages of a euro break up in the coming months.

In the USA, stock markets have had a turbulent week as investors pull out of higher risk assets and into safer assets such as US government bonds. This flight to the safety of US bonds has also driven US dollar strength throughout the week, hitting a 2 month high against sterling and an 11 month high against the euro. Out later today there is inflation data so call in now for a live exchange rate.

Elsewhere, the Swiss franc strengthened after the Swiss National Bank chose not to change the pegged exchange rate against the euro. This saw currency strengthen after investors had widely expected the SNB to raise the rate to counter deflation in the country. Call in now for a live rate.

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Sterling hit the highest level against the euro for nearly 10 months yesterday, breaking through €1.19/£1 as a lack of confidence in a solution to the debt crisis and the risk of downgrades gathered pace. Negative sentiment towards the euro did however drive sterling lower against the US dollar as investors looked to the safer haven of the US currency. Sterling is not necessarily being driven by any UK data, more the lack of confidence in the euro. One slight positive for sterling was that Spencer Dale, chief economist at the Bank of England, felt that inflation would not fall as fast as predicted and as such he would not necessarily support further Quantitative Easing. Call in now for a live price.

In the euro zone, the euro suffered yesterday again falling to a 10 month low against sterling and an 11 month low against the US dollar. Concerns are high over the impact of potential sovereign debt rating downgrades after several rating agencies this week warned of possible European wide cuts to credit ratings. Italy also struggled to auction a round of 5 year bonds and ended up paying record costs for its 5 year borrowing. Call in now for a live exchange rate as we could conceivably be over 1.20 very soon.

In the USA, stock markets dropped for a 3rd straight day as investors concerns that Europe was not containing the debt crisis impacted on stock purchases. The US dollar strengthened against most currencies as investors looked to the safer haven of the currency to avoid losing out.

Elsewhere, the Swiss franc dropped to the weakest level in 9 months ahead of a meeting later today where the Swiss National Bank will decide whether to further weaken the currency. Call in now for a live exchange rate.

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Sterling hit a fresh 9 month high against the euro yesterday, touching €1.1880/£1 after comments by Angela Merkel unsettled investors already disappointed by the outcome of last week’s EU summit. Traders sold the euro after the German Chancellor made comments that rejected raising the funding limit of Europe’s bailout fund in future. Sterling has made gains as investors move funds from euros into the relative safety of UK government bonds. Many investment banks have been scrambling to amend their sterling/ euro forecasts with many calling for the pound to be nearer to €1.25/£1 in the next few months. Be aware that sterling started 2011 well, jumping above €1.20/£1 but soon dropped to €1.10/£1 so if it does move, be prepared to take advantage to prevent it moving against you.

In the euro zone, with the EU summit falling short of any concrete commitments that would see the ECB issuing ‘eurobonds’ and credit rating agency S&P putting all 27 EU countries on review for a rating downgrade, it is no surprise that Angela Merkel’s comments caused a euro sell-off. Rating agency Fitch also said that a lack of a comprehensive solution to the crisis had put pressure on its own ratings of European states. Despite UK inflation data dropping back below 5%, the euro continued to fall throughout the day. Call in now for a live exchange rate.

In the USA, US retail sales dropped by 0.4% coming in lower than expectations marking a disappointing end to a relatively positive run of data from the USA. The Federal Reserve kept interest rates on hold overnight and is widely expected to wait until the New Year before launching any new initiatives. This disappointed traders somewhat and saw stocks fall. It is a relatively quiet day for data today but expect markets to be driven by euro sentiment. Call in now for a live exchange rate.

Elsewhere, the Australian dollar regained ground yesterday against the US dollar and sterling. Commodity backed currencies are particularly volatile at the moment given the ongoing concerns regarding the euro zone – ensure you don’t lose out.

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Sterling surged against the euro yesterday after investor concerns over the EU summit saw sterling jump above €1.18/£1 for the first time since February as investors shed the single currency. The single currency shed 1% against a stronger pound after Friday’s EU summit failed to restore confidence that policymakers could reach a solution. The main headline for the UK has been David Cameron’s decision to veto the EU treaty on Friday and there was talk that this could isolate the UK from Europe in the long term. Despite this, many analysts expect sterling to strengthen against the euro as European policymakers struggle to implement new rules. Out later today there is inflation data so ensure you stay on top of rates and call in to speak to one of the team.

In the euro zone, the euro plummeted as analysts struggled to comprehend how the 17 euro zone nations would implement the new tougher measures agreed on Friday. Following the UK veto, it is up to the remaining countries in the EU to enact laws to entrench binding debt ceilings and punishments, but many analysts are struggling to comprehend how quickly this will address the immediate concerns over liquidity. In terms of data, there is economic sentiment data released tomorrow which is likely to have dropped on last month.

In the USA, the US dollar strengthened yesterday after investors looked to the safe haven of the currency as risk appetite plummeted. Higher yielding currencies such as the Australian dollar fell notably. Out later today there is retail sales data and the Federal Reserve’s monthly interest rate policy statement. Call in now for a live exchange rate.

Elsewhere, along with other commodity backed currencies, the Canadian dollar fell to the lowest level in December as Moody’s credit rating agency said that it would review the credit ratings of all EU nations following Friday’s summit. Call in now for a live exchange rate.

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Sterling had a relatively strong week against the euro last week, but failed to push higher on Friday as analysts were left to digest the outcome of the EU summit. David Cameron’s veto of the treaty changes was referred to as “bad for Britain” by Deputy PM Nick Clegg yesterday and there could be signs of cracks beginning to form in the coalition, which could be negative for sterling. However, polls by major newspapers seem to show that the majority of the public are in favour of the veto. The PM speaks to the Commons later today on the veto and reasons behind it. Later this week we have inflation, unemployment and retail sales figures so call in now for a live exchange rate.

In the euro zone, leaders made decent progress towards a solution to the debt crisis at last week’s summit. The measures include a new treaty aimed at a ‘genuine fiscal stability union’ and the adoption of a new rule that the annual structural deficit may not exceed 0.5% of GDP. In addition, punitive measures kick in if this is deviated from. It is already widely known that the UK was the only member of the EU not to sign up to the new measures and it remains to be seen what the impact of this is likely to be. Later this week there is further discussion over amendments to the EFSF so call in now for a live exchange rate.

In the USA, the US dollar was very volatile last week with the market trading back and forth ahead of the EU summit. In the end, investors were somewhat disappointed at the lack of a comprehensive solution to the crisis and the US dollar ended the week marginally down. Market sentiment is set to remain subdued in the coming days as investors and analysts digest the details of the summit. Released this week we have retail sales and inflation figures so call in now to avoid losing out.

Elsewhere, with market movements and concerns over the EU summit, sterling has performed well against the commodity currencies including the New Zealand dollar. Sterling has held above $2.00/£1 for the past few days, but sentiment is fragile and it could easily drop back below 2. Call in now for a live exchange rate.



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Sterling hit a one month high against the euro yesterday and was set to make further gains after investors sold the euro on concerns that the ECB had not taken more drastic action to solve the euro zone crisis. Whilst the Bank of England made no further changes to monetary policy this month, the ECB cut interest rates by 0.25% and offered long term lending to banks, but many analysts felt this was not enough. The releases of the minutes from the Bank of England’s meeting are expected to show discussions around the introduction of further Quantitative Easing in 2012. QE is normally seen as negative for a currency, but many feel that in the face of the euro crisis, markets may start to reward proactivity from central banks.

In the euro zone, markets were not particularly happy about the lacklustre action from the ECB ahead of the EU summit later today. Yet again, there is an expectation from markets that only a comprehensive solution will suffice, but many are expecting to be disappointed. A clear plan towards fiscal integration is the aim, but most analysts expect a half-baked compromise that will fail do achieve very much. Either way prepare for euro weakness by speaking to one of the team now to avoid losing out.

In the USA, the US dollar has taken a back seat in the last week as investors focus predominantly on the crisis in the euro zone. The US dollar has been a barometer of market sentiment, strengthening against the riskier currencies in the face of the crisis. Released later today is trade balance data, but this is likely to be relatively insignificant compared to what happens in the euro zone.

Elsewhere, the Japanese yen strengthened on the ECB’s news, showing that the yen is still a go-to safe haven currency. This morning sterling is performing well against commodity based currencies so call in if you have any currency requirements for those currencies.

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Sterling hit a one month high against the euro yesterday of €1.1748/£1, coming close to the highest level since March after a German official played down market expectations of a comprehensive solution to the euro crisis being announced on Friday. Weak industrial data for the UK was largely ignored as the focus intensifies on the outcome of Friday’s summit. Industrial output slipped at the fastest pace in 6 months in October, raising further concerns over the UK recovery as the economic picture deteriorates further. The Bank of England announces this week’s interest rate decision later today and is not expected to make any changes to monetary policy this month.

In the euro zone, the euro fell after a German official said that Berlin was becoming pessimistic over the likelihood of a comprehensive solution being announced on Friday as many governments failed to grasp the gravity of the situation. A key focus of the summit is the level of progress towards fiscal integration whilst minimising the moral hazard of any political changes. The European Central Bank is widely expected to cut interest rates today so call in now for a live exchange rate.

In the USA, the US dollar yet again took a back seat to the European debt crisis and the build up to Friday’s EU summit and today’s (expected) interest rate cut. Barclays Capital yesterday amended their US dollar/ sterling forecasts to reflect a general movement from euros towards the US dollar over the coming months, meaning that sterling is now expected to drop steadily towards $1.50/£1 over the next 12 months. Call in now to avoid losing out.

Elsewhere, the Australian dollar strengthened yesterday after GDP growth figures came in at 2.5% - beating expectations by nearly 1%. Australian growth has been strong, yet the Reserve Bank of Australia has begun to cut interest rates to cope with potential slowing demand from China.

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Sterling fell against the US dollar yesterday as it followed the euro downwards after credit rating agency S&P put 15 out of the 17 euro zone countries on notice for a potential credit rating downgrade. Poor retail sales figures and housing surveys contrasted with stronger than expected industrial data from Germany, highlighting the fragility of the UK economy. Survey by the British Retail Consortium showed that retailers suffered their biggest annual drop in like for like sales since May. UK data has been particularly poor of late and as a result, sterling has taken a punishment as the euro crisis deepens. Call in now for a live exchange rate.

In the euro zone, the euro fell against the US dollar as investors focussed on the unprecedented warning issued by rating agency S&P. With the credit warning including France and Germany, investors are increasingly concerned over these perceived ‘safer’ countries and their abilities to repay their debts. With the ECB widely expected to cut interest rates on Thursday and the EU summit set to deliver a day of volatility it is set to be an interesting few days on the currency markets. Call in now for a live exchange rate.

In the USA, it was a fairly quiet day in terms of data with no real significant releases. With markets waiting for the EU Summit on Friday and the ECB interest rate decision tomorrow morning, there is no clear direction as to the US dollar’s direction ahead of the New Year. Friday will be a key day that decides the movement for the coming months so call in now to ensure you don’t lose out.

Elsewhere, the Swiss franc continues to come under pressure after an array of poor figures and talk of the Swiss National Bank increasing its floor on Euro/ Swiss franc to €1.25/€1 or more. Call in now to ensure you are protecting yourself ahead of Friday’s summit.

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Sterling strengthened against a weaker US dollar yesterday after risk appetite improved following good demand at a Spanish bond auction. Sterling slipped from earlier highs against the euro after poor manufacturing figures showed that the sector had contracted for a second month in a row. Whilst there is improved risk appetite, sterling could be set for gains against the euro if European policymakers fail to address the crisis effectively in the coming days. This week has seen poor prospects for sterling as the outlook for growth was slashed in George Osborne’s autumn statement. In terms of data, there is construction sector activity data released later today which is expected to show a contraction. Call in now for a live exchange rate.

In the euro zone, despite Spain’s borrowing costs hitting the highest levels for 14 years, there was widespread relief that the country managed to sell the full amount of debt at a closely watched bond auction yesterday. This was important as it was a key gauge for investors as to market sentiment over Spain’s ability to cover its debts. Analysts expect sterling to strengthen over the coming months against the euro as investors move funds into UK government bonds, which remain AAA rated by all major rating agencies. Call in now to ensure you are in a position to take advantage.

In the USA, the US dollar slid against the euro for the 4th day in a row as risk appetite steadily improved over the week. With many investors positioning themselves for today’s key employment number – non farm payrolls – it was a relatively quiet day for the US dollar. US data has been better than expected this week, which has added to the improving picture for the US recovery. Call in now for a live exchange rate.

Elsewhere, the commodity backed currencies have had a strong week making gains off the back of improved risk appetite despite the crisis in Europe. Wednesday’s co-ordinated action by central banks to ease the US dollar swap rate improved sentiment globally. Call in now for a live exchange rate.

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Sterling jumped by 0.8% against the US dollar yesterday after co-ordinated emergency action by several central banks saw risk appetite jump and investors return to riskier assets. The Federal Reserve, European Central Bank, Bank of England and central banks of Canada, Japan and Switzerland agreed to cut the cost of US dollar swaps to help boost liquidity and help European banks hurt by the euro zone crisis. Despite the gloomy outlook outlined in Tuesday’s autumn statement, sterling rallied against the US dollar, but slipped against ‘riskier’ currencies as investors felt happier taking risks. Out later today there is manufacturing activity data which will be key in painting a picture of the UK recovery. Call in now for a live exchange rate.

In the euro zone, the euro surged against the US dollar on the news of the co-ordinated action, in essence a huge injection of Quantitative Easing on a global scale. Liquidity – or the availability of borrowing – has been squeezed by the escalation of the European debt crisis. The measures are in no way a solution to the crisis and the euro faces a make or break 10 days. With rumours circulating of firms implementing assessments of the impact of a euro break up, European policymakers have until the December 9th summit to deliver an effective solution that delivers a long term fix to the problems. Call in now for a live exchange rate.

In the USA, the US dollar weakened off against most of its major counterparts as the measures were announced. With cheaper US dollars now widely available, investors took advantage and bought into higher yielding ‘commodity backed’ currencies. Aside from this, there was some surprisingly positive data released in the US yesterday that showed that US private sector jobs increased by 206,000 in the previous month. Business activity data jumped and US pending home sales jumped by 10% in October. Combined with last week’s strong retail sales, the figures painted a much better than expected picture of the US recovery than many had thought. Call in now for a live exchange rate.

Elsewhere, commodity currencies surged as investors took advantage of increased risk appetite. The South African rand jumped by over 2% against the US dollar and the Australian dollar made similar gains. If you are moving those currencies into sterling, now is a great time so call in now to take advantage.

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